In what looks like a classic case of closing the barn door after the horse has escaped, the Internal Revenue Service on Wednesday announced new rules to restrict political activity by so-called social welfare non-profits.
The move comes more than six months after the agency disclosed that from 2010 to 2012 it sat on applications by mostly grass-roots conservative groups with tea party affiliations for tax exempt status under the social welfare category known in tax jargon as 501 (c) (4). This category was already employed by large liberal and conservative groups to raise tax-deductible contributions used mainly to advertise their support for — or opposition to — political figures.
Between 2008 and 2012, spending on campaign issues by such organizations rose from almost nothing to about $250 million a year, according to The Wall Street Journal.
The suppression of tea party applications during this period undoubtedly helped tilt such spending toward organizations favoring Democrats.
In May, after the news broke that the IRS inspector general found the agency gave the slow track or otherwise obstructed many tea party applications for tax-exempt status. Lois Lerner, director of the IRS’ exempt organization division, blamed the logjam on “low level” employees in a Cincinnati IRS office.
But as congressional Republicans dug into the matter with committee investigations, they found that IRS headquarters in Washington, working through Ms. Lerner, had initiated the freeze.
Ms. Lerner resigned from the IRS in September. The leading Democrat on the House Ways and Means Committee, Sander Levin of Michigan, said she had been held responsible for “gross mismanagement” of the agency’s tax-exempt division.
Yet The Cincinnati Enquirer reports that the backlog of conservative applications has continued to grow.
Now the IRS has announced new rules that will define political activity and measure how much of it a “primarily” social welfare organization can engage in and still retain its tax-free status. Those regulations will allow less political activity by social welfare organizations of all political persuasions.
However, they won’t take effect until after the 2014 elections.
Meanwhile, IRS employees will be encouraged to continue to look unfavorably on politically active grass-roots organizations seeking tax-exempt status. And due to current political realities, those groups are much more likely to be conservative than liberal in outlook.
The IRS is supposed to be non-partisan.
But it still appears to be tilting the scales against conservatives.